SEP 1 2 2017 September 5, 2017 Thorovement Distr Herman Honorable Judge James Herman, Presiding Judge Santa Barbara*

R1

The Santa Barbara County Water Agency be designated as the permanent lead agency of the Santa Barbara Cooperating Partners and granted enforcement power to ensure reliability of Santa Barbara County water supplies. ID No.1 Response to Recommendation 1: Respectfully disagree with the reference and cannot support that the Santa Barbara County Water Agency be designated as the permanent lead agency to ensure reliability of water supplies for the region and ID No.1. ID No.1 was formed in 1959 pursuant to the California Water Code 74000 & 75000 with broad powers and authority over its water supplies and other latent powers, and has wide-ranging governance powers afforded by that law. As such, ID No.1 is controlled by an elected governing body that represents its interests and rate paying constituents with the authority to control financing, acquire and manage water supplies, and act as lead agency to make water supply decisions at a local level while coordinating and participating on a regional basis. ID No.1 has secured water rights in the Santa Ynez River, it contracts and funds its prorated cost share for State Water Project ("SWP") water through CCWA, interacts with Bureau of Reclamation and pays for all costs for its allocated water supply from the Cachuma Project, and conjunctively operates and manages its groundwater source of supply in the Santa Ynez Upland Groundwater Basin. ID No.1 with its local and regional water supplies are subject to Federal and State licenses, permits and regulations that ensure public health, safety, and trust resources are protected. The Water Agency does not have the governance structure to fairly represent ID No.1's local and regional water supplies. The County has no voting structure to represent ID No.1's water supplies, nor fiduciary responsibility, it has no role providing water service as it has no customers, no infrastructure, no permits or licenses issued by the State Water Resources Control Board ("SWRCB") or Division of Drinking Water, does not set water rates, nor direct accountability to the customers receiving water from ID No.1; thus no water management experience. Although this recommendation in concept may appeal to those on the Grand Jury, the Santa Barbara County Water Agency is not impartial due to the complexities and divergent positions regarding water supply, has conflicting policy goals per the SWRCB hearing record 2003, and has also relinquished its one role as a lead agency in 2013 in the IRWM grant process leaving it to the local water agencies. As such, another layer of governmental control would further constrain and obfuscate the ability of ID No.1 as a water management agency under its governance authority pursuant to the California Water Code.

R9

That each Santa Barbara County south coast water purveyor establish and fund a restricted capital replacement account. ID No.1 Response to Recommendation #9: The ID No.1 Board established a reserve policy and reviews and updates those policies from time-to-time. The ID No.1 capital repair and replacement, and plant expansion reserves (accounts) are unrestricted, Board reserved and approved for funding in accordance with the Capital Improvement Plan and with Board action on the annual budget. These reserves are replenished with year-end unexpended revenues. ID No.1 also has on deposit with CCWA a "rate coverage reserve fund" for the purpose of complying with the rate covenant for maintaining financial coverage. The Board maintains the authority to restrict reserves. Because the report